Oracle President Charles Phillips sees benefits in outsourcing.
		By Tim Loehrke, USA TODAY

These days, Phillips shares the No. 2 executive spot at Oracle, and is one of the highest-profile African-Americans in the technology industry. He joined the company in 2003 after nine years as a software industry analyst for Morgan Stanley in New York.

Phillips keeps a home in New York and one in Silicon Valley, Oracle's headquarters. He stopped by USA TODAY on his way back from the Democratic convention in Boston, which Phillips attended as a delegate from New York. Wednesday, he was named by presidential nominee John Kerry as one of 204 executives who endorse Kerry's economic policies. He is also a confidant of vice presidential candidate John Edwards. Phillips was interviewed by Kevin Maney:

Q: Microsoft has made forays into Oracle's business of databases. Are you moving into Microsoft's areas — maybe the consumer market?

A: We're not going to move into the consumer market, but we are moving into the small-business market pretty aggressively. Microsoft is starting to feel that already.

Phillips' take on: Microsoft: Linux helps us because once a customer decides to go that way, Microsoft does not have a product that runs on that. Outsourcing jobs: I think it's good for us to have the per capita GDP increase in these countries. When they cross a certain threshold, they start buying technology. They're not customers for us if they're worried about food and water. Larry Ellison: Larry, we hope, is going to be there a long time. He's healthy and fit, and his vision is very important to Oracle's success.   About Charles Phillips Charles Phillips is one of two presidents at Oracle, sharing the job with Safra Catz and reporting to CEO Larry Ellison. Age: 45 Previous position: Morgan Stanley financial analyst since 1994. Education: B.S. in computer science from the U.S. Air Force Academy; MBA from Hampton University in Virginia; law degree from New York Law School. Odd fact: Used to go by Chuck as an analyst, and had his own toll-free line, 800-MRCHUCK. Recognition: While at Morgan Stanley, was named one of the top 50 black professionals on Wall Street by Black Enterprise magazine. About Oracle: Oracle develops and sells database technology that can run huge operations such as Visa International's transactions and the government of New York City. It also sells software that helps run corporations and other major operations. It often lines up as a foe of Microsoft.

We run on Linux (an open-source, free operating system championed by IBM, Red Hat and other Microsoft competitors) on a small PC. We never had that relative to Microsoft before. They were cheaper because you had to buy a big (mainframe) machine to run us. So we're actually much cheaper than they are now, and we never had that before.

Q: Are you seeing weaknesses at Microsoft?

A: We're definitely seeing that. There are so many companies that want a cheap, small, fast operating system, and that's what Linux is. I just got back from China, and they are making Linux standard. India's going in the same direction. So it's gaining incredible momentum.

Linux helps us because once a customer decides to go that way, Microsoft does not have a product that runs on that. (Microsoft's run on Windows.)

Q: There is excitement in tech circles about open-source software — not just Linux, but other kinds of software, like databases. MySQL is popular. Could that create the same problem for Oracle that Linux created for Microsoft?

A: We think open-source databases are a good thing for us. They've always been around. MySQL is only the latest one. It trains people in what a database is and so they practice on these products, and when they're ready to deploy a database in a real company, they migrate to Oracle.

If they have to fly economy, they will, but they would prefer first class.

Q: Microsoft might've said the same about Linux five years ago.

A: Database requirements shift every year. It's a moving target, and we have trouble keeping up with thousands of engineers. This is a very esoteric area of technology. When you're talking petabytes (one petabyte is a million gigabytes, equal to about 20 million four-drawer filing cabinets full of text) of data and you want 2 million people to have access simultaneously, not very many people can solve that problem.

Q: The outsourcing issue is hot right now. What is Oracle's take on that? You've said you've been adding 250 jobs a month in India.

A: The majority of our revenue — over half — now comes from outside the U.S. We have lots of people outside the U.S. because customers are there.

As for do we do development offshore, sure. Some esoteric skill sets are hard to find, and we'll hire them wherever they are — India, China and other places. But our total headcount continues to grow. We are up in the U.S. as well this year. We're adding where it makes sense.

Q: In his speech at the convention, Kerry was saying we should stop sending jobs to other countries.

A: It's a complicated issue. I think it's good for us to have the per capita GDP increase in these countries. When they cross a certain threshold, they start buying technology. They're not customers for us if they're worried about food and water.

So we're going to create customers and create jobs there. We're getting a lot more in terms of selling into China than we're losing in terms of exporting jobs over there.

Q: Does the Democratic platform have it wrong?

A: We can demonstrate that it has been additive. I don't think (the issue) has really been discussed and thought out.

Q: Do you do much succession planning at Oracle? Who's the next Larry?

A: Well, I'm not sure there will ever be such a thing as a next Larry.

Q: The question came up after (former president) Ray Lane left.

A: I can't tell you we spend a lot of time on that topic. Larry, we hope, is going to be there a long time. He's healthy and fit, and his vision is very important to Oracle's success.

Q: How involved is he now?

A: He's involved now a lot more. There was a period of time when Ray was here and when he stepped back for a bit. And, thankfully, he got re-engaged.

Q: Oracle and Sun Microsystems used to be tightly allied. Has that broken down?

A: There's some truth to that. Our interests were more closely aligned four or five years ago. As Linux and Intel have become more important to our strategy, Sun hasn't quite followed us. They're suffering for that now. They're still trying to figure it out. We can't wait around. Hopefully, they'll be better aligned with us in the future.

Q: How about the fight to acquire PeopleSoft?

A: I thought you were going to forget to ask me that.

Q: No, of course not.

A: Well, right now the trial's over and the closing arguments are done. We're a little bit in limbo waiting for a decision. It's up to the judge. We're prepared either way. If we get it, great. If not, we'll get their customers anyway over time, one at a time. So all we're talking about is timing.

Q: If not PeopleSoft, do you plan to do other acquisitions?

A: We've made some assumptions about the industry maturing and overcapacity. And there's an opportunity to buy decent companies at good prices. That's what's changed. Five years ago, the prices were unreasonable.

Q: Is the technology industry bouncing back?

A: People are frustrated because there hasn't been a clear pattern. Investors have been too optimistic. It could be that the traditional relationship between economic recovery and tech spending is changing permanently.

It used to be that when the economy got better, people started buying technology again. I don't think that's the case anymore.

People spent too much on tech and still have a lot from the old days.

They're skeptical and holding on to their cash because they don't know if the recovery is going to last.